TechBytes - Technology and Outsourcing Blog

In 2010, the European Commission adopted a strategy for smart, sustainable and inclusive growth (Europe 2020) which requires strengthening knowledge and innovation as drivers of the Union's economic growth. In this context, in November 2013, the EU Commission submitted to the Council and the Parliament a draft directive on the protection of trade secrets. Whilst it has yet to be discussed by the European Parliament the Council has recently given an opinion on the draft.

Recent studies by the Commission have highlighted the fragmented and diversified nature of the existing protection for trade secrets across the European Union and concluded that:

differences in trade secret protection can hinder cross-border research and development, and may place companies within the EU at a competitive disadvantage; and

harmonisation of the law in this area would improve conditions for businesses to develop, exchange and use information and know how.

The harmonisation process is intended make it easier for national courts to deal with the misappropriation of confidential business information, to remove infringing products from the market, and make it easier for victims to receive compensation for illegal actions. All patents, designs and trade marks begin life as commercially sensitive information which is, until an intellectual property right is obtained, vulnerable to theft. As the rate of innovation tends to be greatest in small and medium sized businesses, start-ups, and those in the technology industry, these tend to be the organisations most at threat and therefore could be the ones to benefit most from an update to the law.

To facilitate harmonisation the draft directive introduces a common definition of trade secret; that is, information that:

is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question;

has commercial value because it is secret; and

has been subject to reasonable steps by the person lawfully in control of the information to keep it secret.

This is useful as it gives a common understanding across the European Union as to what should, as a minimum, be protected. As the definition of trade secret holder is fairly wide, being any person that lawfully controls a trade secret, this could arguably give licensees (as well as the ultimate 'owners' of the trade secret) a right to prevent and obtain redress for the unlawful us or disclosure of a trade secret. This is not generally the case with other intellectual property rights.

However, there are a number of issues with the directive which lead commentators to believe that it may not give the full protection to trade secrets which is enjoyed in relation to other intellectual property rights, for example, the lack of availability of measures for collecting evidence of illegal disclosure, acquisition, or use.

It seems that whilst this may be a step in the right direction the best advice is, in the wise words of Gandalf the Grey – "Keep it secret, keep it safe".